common property after dissolution of HOA

Our HOA was formed in 1968 under Michigan PA 137. By statute, the term of existence is 30 years unless the governing documents are renewed. After looking though all the documents, we cannot find that the governing documents were ever renewed.

In 2011 the "30 year issue" was discovered by a trustee and brought to our board's attention. The President at that time was someone who refused to call meetings, authorize funds, or respond to members. He was generally rude, hostile, and combative. He was voted out of office last June. (I've written about him elsewhere in this forum.)

In December, the then-President filed suit to ask a judge to declare, based on the expiration of governing documents, that our HOA does not exist.

Our HOA is comprised of a beach, private roads, and about 100 properties.

Today I met with our Township Supervisor, who told me that if our HOA is dissolved, the Township will *not* maintain the roads. (Currently, almost all of members' annual dues are spent on road maintenance, including grading, road material, dust control, snow removal, and ice control.)

Our HOA has liability insurance that includes E&O coverage. Our case is being handled by an attorney firm hired by our insurance company. I think the legal strategy will be to ask the judge for time to re-incorporate.

I should add that all but one or two members very much want our HOA to exist.

If the judge declares that our HOA no longer exists, what happens to the private beach and private roads? Who maintains them?

Crystal-
I don't know, but I sincerely doubt that the judge will do anything other than allow you to re-incorporate.

I was born and raised in Michigan and when your HOA was formed, my late husband was elected to the Michigan House of Representatives.

I am not a lawyer, but I believe that with the financial mess the state is in now, the township would prefer that the HOA is re-incorporated and if you just follow the proper steps and file the papers with the secretary of state, you will get the responsibility back.

I doubt that anyone sees any profit to be made by attempting to thwart your plans, so I suspect you will be able to move ahead without problems.

One of my nephews is still living outside Flint, and the mayor offered to GIVE him a big chunk of city properties which owed back taxes if only he would keep the grass cut. He declined.

The township doesn't want the property. They'll tell that to the judge.

Good Luck Dear.

I know how expensive it is to maintain roads with that weather.

The CC&Rs acted as your private road agreement (PRA).

Without the CC&Rs, everyone would be responsible for their portion of the road. I would suspect that without an actual PRA attached to the deeds that some banks may be leery of financing new buyers.

The same might go for the beach as well.

The other option would be to find some entity (city, county, another Association) to take responsibility of the road and ownership of the beach.

My advice (for what it's worth), if people don't want an HOA with the rules and regs, that the owners agree to a simple agreement to fund the maintenance, repair, etc. of the common elements and not include all the other build/use restrictions.

And if no one takes care of the roads, all who live on it would be included in any legal action (likely for negligence) if an accident happened that could be contributed to the condition of the road.

One thing you have overlooked is mortgage companies. The banks are really starting to crack down on paperwork. If the HOA does not exist, and there is no road maintenance agreement with your neighbors, no bank will touch it. Which means, it will not be eligible for a mortgage or refinance with a new bank. Which means you need to find a cash buyer. This could mean a 50% reduction in your selling price.

Not good.

So many great points have been made here.

SteveM9 brings up an important consideration:

"One thing you have overlooked is mortgage companies. The banks are really starting to crack down on paperwork. If the HOA does not exist, and there is no road maintenance agreement with your neighbors, no bank will touch it. Which means, it will not be eligible for a mortgage or refinance with a new bank. Which means you need to find a cash buyer. This could mean a 50% reduction in your selling price."

And LarryB13 is correct about this as well, based on my conversation with the Township Supervisor yesterday:

The plaintiff has misunderstood his obligations. There is a legally enforceable obligation for users to contribute to the maintenance of roads and other common elements whether there is a formal association or not.

We will do our best to persuade the judge to allow time to re-incorporate our HOA.

It depends on the language used in the statute.
Can you provide a link to it?

Crystal,

Well if the Corporation was never renewed or reincorporated under 450.2815, the NONPROFIT CORPORATION ACT, then it's likely that the law will require the township to take control of the roads and common areas:

455.220 Corporate term of existence; expiration; cessation of jurisdiction.

Sec. 20.

When a corporation, organized under this act, shall dissolve or its term of existence expires by limitation, all jurisdiction over streets, alleys and highways shall cease and the said streets, alleys and highways shall thereupon become dedicated to the use of the public, and in such case the lands of the members shall be cleared of all jurisdiction conferred by the provisions of this act.

This of course means, the private roads and private beach becomes public. It also means that all the concerns previously provided about liability and private road agreement become mute under this statute.

Tim,

I think you have misunderstood a part of this. While the roads become "dedicated to the use of the public," they do not become property of a public agency nor the obligation of an agency to maintain.

Easements for roads typically are dedicated either for exclusive ingress and egress by certain persons, such as members of an association, or for use by the public. (Non-exclusive ingress and egress is usually interpretted as the same as a dedication to the public.)

We have had a number of opinions from the courts in Arizona in recent years about easements and one argument that is raised and shot down repeatedly is that a road is not public unless a public agency has agreed to accept ownership or responsibility. The courts have held, in effect, that granting use to the public is a separate issue from public ownership or public maintenance.

If the roads in Crystal's development were easements over private property, the owners would not lose title to their land under the cited statute but they would be powerless to prevent the general public from using the roads.

Left unanswered by the above statute is what happens if the roads and/or beach are on property deeded to the association?